Carl J. Schramm

Interhospital differences in severity of illness. Problems for prospective payment based on diagnosis-related groups (DRGs).

We evaluated the ability of the diagnosis-related-group (DRG) classification system to account adequately for severity of illness and, by implication, for the costs of medical care. Hospital inpatients on medicine, surgery, obstetrics/gynecology, and pediatrics services in six hospitals were evaluated to provide a spectrum of patient and hospital characteristics. This evaluation was based on data from a generic index of severity of illness obtained by trained personnel from a review of hospital charts after patient discharge. Within each DRG, substantial differences were found in the distribution of severity of illness in different hospitals. Some hospitals treated larger proportions of severely ill patients and had a wide range of severity within each DRG, but these differences did not always agree with the teaching classification or the Health Care Financing Administrations case-mix index. These findings suggest that patient classification by means of unadjusted DRGs does not adequately reflect severity of illness, and they indicate that prospective payment programs based on DRGs alone may unfairly and adversely discriminate against certain hospitals.

Hospital Cost Inflation under State Rate-Setting Programs

Evaluations of the early phases of state efforts to control hospital costs led to discouraging conclusions about the effectiveness of such programs. To determine whether cost regulation has improved since then, we compared the experience of the six states that have comprehensive, legally mandated hospital rate-setting programs with that of the states without such programs during the period from 1970 to 1978. During the last three years of this period, the average annual rate of increase in hospital costs in rate-setting states has been 11.2 per cent, as compared with an average annual rate of increase of 14.3 per cent in states without such programs (P < 0.05). We conclude that much of the initial pessimism regarding the effectiveness of hospital rate-setting programs, based on studies that covered earlier reporting periods, may be unwarranted.

Investor-owned chains and teaching hospitals. The implications of acquisition.

Within the academic medical community, there is concern about the future economic viability of teaching hospitals. Numerous studies, congressional hearings, and conferences have explored the proble...

The Teaching Hospital and the Future Role of State Government

IN the decade ahead, medical education in the United States will be governed more than ever before by inflexible economic imperatives. In the past century economic imperatives were overshadowed by ...

Investing in the wrong future for hospitals

The process of offering hospital debt in public markets is strongly influenced by the feasibility study. The inaccuracy of such studies may produce substantial overinvestment in hospital capital.